The Indian Research and Genetic Diagnostics Industry needs a push
The Government has been making strides in the healthcare segment and this has resulted in access to healthcare for millions.
One of the key areas that the government has looked to subsidise the cost of healthcare is to have 0% GST for clinical diagnostics and healthcare services. However, the lab reagents and other consumables that are used for providing these services are not exempt from GST and hence this cost is borne by the patient. By exempting these consumables from GST, the benefit can be transferred to the consumer resulting in a reduction in cost to the patient.
Similarly, from a research standpoint, the government should consider an exemption of GST on consumables and services so that public-funded and private research organisations will have more usable funds for doing research, thereby increasing the R&D output and innovations from India. At the moment, if the government releases Rupees 1 crore for a research project, about 15 lakhs goes back as GST (considering average 18%GST for input materials), leaving only Rupees 85 lakhs of usable funds!
We are also hopeful for a reduction in customs duties on the imported research consumables. Many of these are proprietary or patent-protected, and they are essential for carrying out research as well as clinical diagnostics. The customs duty on these products is astronomically high, making it expensive for Indian researchers and patients. For eg, The DNA sequencing reagents used for COVID genome sequencing as well as genetic diagnostics that are imported from the USA come with about 33% custom duty, surcharges, and 18% GST on top of that, making them almost 50% more expensive than the base price.
The government may be putting high custom duty for discouraging the use of imported material, however, for the country to build its R&D pipeline and develop indigenous alternatives, it’s important to have these incentives. The R&D and clinical diagnostics markets in India are not very large and therefore it may not impact the GST revenue of the government much if these products are considered for exempted GST and Custom duty.